What’s the difference between professional indemnity and public liability insurance cover?

Here’s a quick guide to clear up any confusion over which of these key insurance covers different businesses need.

What is public liability insurance?

Public liability insurance is a must if you’re interacting as a business with the public in any way. It covers against claims for material damages and
injuries (i.e a third party property, so not you or your employees), either on your premises or at an offsite work location. There’s a lot of variation between policies, but the main factors are the same.

Public liability covers you if:

someone is injured in some way by your business, which can save you the cost of a hefty lawsuit

if any property is damaged in the normal course of business, covering any associated legal costs or fines

Public liability is the most relevant insurance cover for businesses working with physical products, but anyone who deals face to face with customers should be covered, in case of an accident.

What is professional indemnity insurance?

Professional indemnity insurance can be confused with public liability cover,
but what it insures against is different: Professional indemnity deals with intangibles. Rather than injuries, it protects against financial losses caused by advice given, negligent design, specification, data breaches, or issues with intellectual property.

In effect, professional indemnity covers against lawsuits brought about because of losses sustained by another business or person if your client thinks you or your business has been negligent. This could be because of professional advice which turned
out to be poor, the loss of data, or if custom-designed software or content is perceived to be below the expected standard.

So which insurance cover do I need?

Anyone interacting with the public should have at least some public liability cover. However professional indemnity is also important for a range of different industries:

If you deal only with physical products, for example in the building or manufacturing trade, then it might seem you only need public liability insurance.

But, professional indemnity might also be useful, such as if you accidentally email client information to the wrong person, then the breach of confidentiality would be covered

If you’re a freelancer or business consultant or location-independent worker who never meets clients where you work, then you’ll
need professional indemnity cover for your work

But, anyone who might meet clients at home would also need public liability insurance

How much cover you’ll need will depend on exactly what industry you work in. However, don’t overlook the importance of either public liability or professional indemnity insurance cover —they could save your business from significant claims for compensation.